Gabe Newell: Windows 8 is a 'catastrophe' for PC biz

Analysis First it was Gartner, now Gabe Newell, the former Microsoft executive and billionaire computer games baron behind Half-Life, has laid into Windows 8.

Newell, who oversaw the first three versions of Windows under Bill Gates among other roles during his 13 years at the software giant, has reportedly called the touchscreen-friendly Windows 8 a “catastrophe for everyone in the PC space”.

Speaking at Casual Connect in Seattle, Washington, All Things D rather meekly reports Newell prophesied the death of some companies that today are happily churning out PCs running the Windows operating system.

He is reported to have told the audience: “I think we’ll lose some of the top-tier PC OEMs [manufacturers], who will exit the market. I think margins will be destroyed for a bunch of people. If that’s true, then it will be good to have alternatives to hedge against that eventuality.”

That alternative, apparently, is the open-source operating system Linux. Newell explained why his company – Valve Software, which he co-founded with ex-Microsoftie Mike Harrington in 1996 – is interested in putting its games on something other than Windows. He also wants to make titles in Valve’s online store Steam available for Linux users. In The Reg’s recent live chat with the boss of Linux distribution Ubuntu, Mark Shuttleworth, there were plenty of penguin-powered punters hoping for a Ubuntu-Steam tie-up.

“We want to make it as easy as possible for the 2,500 games on Steam to run on Linux as well. It’s a hedging strategy,” Newell is reported to have said.

Steam is believed to make up 70 per cent of the digital game distribution market with 40 million users on its books. Today it runs on Windows, Mac OS X, iOS and Android.

Newell’s tongue-lashing came after a Gartner analyst got everyone bent out of shape with a single word summary of Windows 8 when a touchscreen isn’t available: "Bad".

For once, it was a mercifully succinct comment from an industry analyst. However, the Gartner man has since retracted the statement, claiming he was taken out of context. But it reminded everyone that analysts' advice and views are partisan and often paid for: if their declarations are not slyly touting their services to vendors, then their words have been bought by companies to trumpet the brilliance of some new product or strategy.

This is why Microsoft pays IDC to write nice vapid things about how each new version of Windows will produce multi-million-dollar market opportunities around the world.

Question is, do the words of an ex-Microsoftie have more credibility?

Brass rubbed out

A lot of top brass has left Microsoft of late: product managers, marketing and communications types, business execs and brains such as Ray Ozzie without a portfolio to speak of – all gone in the last two years or so.

The reason has been the creeping Sinofskization of Microsoft – a philosophy that strips out a management layer between engineers and those in charge of product strategy. It’s named after Windows chief Steven Sinofsky, who even has a little orange book on how to run things.

Those who left didn’t have a future in the new Microsoft, given the star of Sinofsky is in ascendant: first came Windows 7, next touch, the Metro user interface and ARM processor support in Windows 8. When I’ve chatted to these people they haven't spoken out against Microsoft or Sinofsky in public. Arguably, they couldn’t because they might be dismissed as having an axe to grind.

Newell, though, jumped ship nearly 20 years ago - and on his own terms. He has enjoyed considerable success, and done so by working with Windows: his road towards earning billions in gaming started with Half Life that hit Windows PCs first in 1998, two years after Valve was created. Ten years later, in 2008, Half-Life landed a Guinness World Record for the best selling first-person shooter on the PC with eight million units sold. Since then the franchise has sold more than 16 million units.

Valve was a poster child for the symbiotic nature of the relationship between Microsoft and Windows on one side and independent software makers on the other. Games, above anything else, have helped sell consumer PCs by the container ship-load. Games written for Windows have cemented the operating system into computers in people's homes and the offices of those actually building the game worlds.

What broke the symbiotic link?

Newell was hired by Steve Ballmer in 1983 and spent 13 key years at Microsoft. These were important because they laid the foundations of a successful PC software business that became a successful apps, server and tools giant.

You could argue he’s the old guard who doesn’t “get” touch, and that times have moved on and Newell should go trade memories with Bill Gates over tea sometime.

Also, Newell wasn’t pulled up on his comments: which OEMs did he mean and why? There aren’t too many PC manufacturers left today, thanks to Dell and Intel, which helped drive many rivals out of business and were pulled up by the authorities as a result. Gone in the UK are Elonex, Tiny and Evesham; among those left are Viglen and Stone.

That said Windows 8 does change things for OEMs on a number of fronts: it sees Microsoft exert control over the hardware like never before by wielding UEFI secure boot, while Windows 8 on ARM hardware rules out x86 makers who are alien to ARM architectures. Also, Microsoft has floated its Surface tablet-cum-laptop, a reference design it wants PC makers to follow and that it will manufacture and sell direct itself as an added incentive to make PC manufacturers fall into line.

The whole ethos of Windows 8 goes against what has been Windows's success for decades: it might be closed-source code, but you were pretty much welcome to put it on any PC hardware you wanted. It was designed to be the exact opposite of Apple’s hardware control freakery. That’s one reason why Windows sits on 90 per cent of the world's desktops while Apple perches on six per cent.

Whether all this marginalises PC makers and drives them out of business remains to be seen. Certainly Microsoft’s new requirements for future computers could act as a deterrent to new entrants - never mind the more opportunistic players who don’t have a 30-odd year relationship with Microsoft and can’t be bothered with the overhead of new onerous restrictions and rules.

What should be more troubling for Microsoft is this: that somebody behind one of the most successful games franchises of all time, who has moved with the times - building first for Windows and then for Playstation - is now looking at Linux because of his concerns about Windows 8.

To touch, or not to touch

Like other third-party software factories, Valve will be evaluating whether it should bother turning titles built for x86 gear that are connected to mice and keyboards into something for touchy gadgets running Windows 8. Newell is cool on touch, calling it a short-term idea compared to the mouse and keyboard that have dominated computer input for 25 years.

Games on the PC helped establish Windows and Valve. Windows 8 may put PC makers out of business – and truth be told, few will shed a tear – but the problem for Microsoft will be what if more software makers such as Valve turn to Linux rather than stick with Windows 8. This could be something that finally helps establish Linux as an alternative to Windows on laptops and PCs.

Steam is the place where Newell’s company today releases all its titles. Valve has been a paid-up member of the Windows third-party developer ecosystem. If Valve goes, then so goes the ecosystem; if the ecosystem goes, then it’s game over for Windows 8’s easy mass-market adoption. ®